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Client Alert for September 2013


Federal Election tax announcements
The next Federal Election will be held on 7 September 2013. Both sides of politics have made various announcements and promises. Some of the key announcements to keep in mind include the following:

• Company tax rate cut – On 7 August 2013, the Coalition announced that, if elected, it would cut the company tax rate by 1.5% with effect from 1 July 2015. It said the proposed new company tax rate of 28.5% is part of its "significant tax reform agenda to be delivered within the first term". Note that the Coalition has also previously proposed a levy on large companies to fund its proposed paid parental leave scheme.

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Client Alert for August 2013


Specific tax rule to prevent dividend washing
The Assistant Treasurer, David Bradbury, has announced that the Government will prevent "dividend washing" by introducing a specific integrity rule into the tax law. This follows the Government's announcement in the 2013-2014 Federal Budget that it will implement reforms to close, with effect from 1 July 2013, a loophole it believes currently enables some investors to engage in this practice.

"Dividend washing" potentially allows investors who undertake certain sophisticated share transactions to receive two sets of franking credits on what is essentially the same parcel of shares. Mr Bradbury says the proposed specific integrity rule will end this practice. He adds that the measure will not impact typical "mum and dad investors" as it will only apply to investors who have franking credit tax offset entitlements in excess of $5,000.
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Client Alert for July 2013


Medicare levy increase to fund DisabilityCare Australia
The Medicare levy has been increased by 0.5% to help fund the government's National Disability Insurance Scheme, known as DisabilityCare Australia. This will take the Medicare levy from 1.5% to 2% of taxable income from 1 July 2014.

Under the changes implemented by the government, low income earners continue to receive relief from the Medicare levy through the low income thresholds for singles, families, seniors and pensioners. The exemptions from the Medicare levy for blind pensioners and sickness allowance recipients also remain in place.
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Client Alert for June 2013


Cap on work-related self-education deductions
The Government has announced that it will introduce a $2,000 per-person cap on tax deduction claims for work-related self-education expenses. The cap is proposed to apply from 1 July 2014.
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Client Alert for May 2013

Tax planning
There are many ways in which taxpayers can take advantage of tax planning initiatives to manage their taxable incomes. In order to maximise these opportunities, taxpayers need to start the year-end tax planning process early. Of course, when undertaking tax planning, taxpayers should be cognisant of the potential application of anti-avoidance provisions. However, if done correctly, tax planning can provide possible tax savings.
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Client Alert for April 2013


No more CGT discount for non-residents
The Government has issued for comment draft legislation proposing to implement its 2012 Budget announcement that it will remove the capital gains tax (CGT) discount for non-resident individuals on taxable Australian property, such as residential and commercial real estate and mining assets.

Under the current law, individual taxpayers are generally entitled to a 50% discount on capital gains made from assets they have held for at least 12 months, regardless of the individual's residency status. The proposed changes will introduce new residency requirements.
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Client Alert for March 2013


No splitting of rental income for couple
The Administrative Appeals Tribunal (AAT) has refused a husband's argument that he could split his rental income with his (now estranged) wife even though the commercial property was registered under his name only.

The taxpayer had lodged tax returns on the basis that the property was shared equally between him and his wife. However, the Commissioner formed the view that as the property was in the husband's name only, the rental income from that property belonged to him alone.
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Client Alert for February 2013


Tasmanian bushfires - lodgment and payment deferral
For victims affected by the Tasmanian bushfires of January 2013, the ATO announced that it will make arrangements to defer lodgment and payment of certain monthly and quarterly activity statements. The arrangements are automatic, which means taxpayers who reside in certain identified postcodes will not have to apply for a deferral.

Taxpayers who are located outside of the identified postcodes and who have been affected by a natural disaster are encouraged to contact the ATO for further assistance.
 
The Tasmanian State Revenue Office has also announced an extension of the time to pay land tax bills for persons affected by the bushfires.
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Client Alert for December 2012 - January 2013


Mini-budget tightens fringe benefits, health rebates and more
The Government's mid-year budget update was handed down in late October 2012. The Treasurer revised down the expected Budget underlying cash surplus to $1.1 billion for 2012-2013 - down from $1.5 billion estimated in the May 2012 Budget.

The Government did not announce anticipated changes to claw-back superannuation tax concessions (much to the relief of many superannuation investors). However, the update did contain a host of small, but not insignificant, tax proposals.
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Client Alert for November 2012

 
ATO benchmarking can be improved: report

The Inspector-General of Taxation's report into the ATO's use of performance benchmarks to target small businesses who may not be reporting all their income has been released by the Government and it says that improvements can be made.
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